CA INTER DT Class Test Paper-1 - House Property [32 Marks]

1. Mr. Raghav has three houses for self-occupation. What would be the tax treatment for
A.Y.2023-24 in respect of income from house property?
(a) One house, at the option of Mr. Raghav, would be treated as self-occupied. The other two
houses would be deemed to be let out.
(b) Two houses, at the option of Mr. Raghav, would be treated as self-occupied. The other
house would be deemed to be let out.
(c) One house, at the option of Assessing Officer, would be treated as self-occupied. The
other two houses would be deemed to be let out.
(d) Two houses, at the option of Assessing Officer, would be treated as self-occupied. The
other house would be deemed to be let out. [2 Marks]
2. Mr. P has a house property in Delhi whose Municipal value is `1,00,000 and the Fair Rental
Value is `1,20,000. The standard rent is fixed at `1,08,000. It was self-occupied by Mr. P
from 01.04.2022 to 31.07.2022. With effect from 01.08.2022, it was let out at ` 10,000 per
month. Compute the net annual value of the house property for A.Y. 2023-24 if the
municipal taxes paid by him during the year were ` 20,000.
(a) `1,00,000
(b) ` 88,000
(c) ` 60,000
(d) `1,08,000 [3 Marks]
3. Mr. Agarwal moved to Mumbai. He took a property on rent for his residential purpose.
However, the property was not fully occupied by him. He let out the property to his friend
at `15,000 p.m. from 01.04.2022 to 31.03.2023. Mr. Agarwal is of the view that income from
subletting of property is taxable as Income from House Property. As tax advisor of Mr.
Agarwal, find out whether his view is correct?
(a) Correct, as any income from a house property is taxable under the head Income from
House Property.
(b) Incorrect, as Mr. Agarwal is not the owner of the property let out by him. The income from
subletting shall be taxable under the head Profits and Gains of Business or Profession.
(c) Incorrect, as Mr. Agarwal is not the owner of the property let out by him. The income from
subletting shall be taxable under the head Income from other sources.
(d) Correct, as income from subletting of a property is directly attributable to the property
itself and hence, chargeable to tax as income from house property. [2 Marks]
 Descriptive Questions

Question-1
Mr. Abul Hasan owns three houses at Ranchi. He furnishes the following particulars for the PY 2022-23:

House No. I: The house was constructed in 2021 and let out to a friend at a monthly rent of ₹ 10,000 upto
31.1.2023 and thereafter, it was let out at its fair rent of ₹ 15,000 per month. He has paid ₹ 15,000 as municipal
taxes @ 10% of Municipal Value. He has also paid fire insurance premium of ₹ 2,000.

House No. II: Ground floor is let out @ ₹ 20,000 p.m. first floor, identical to ground floor, is occupied by him for
his residence. Municipal taxes paid @ 20% amounted to ₹ 80,000.

House No. III: The house was constructed in 2011 and is used for his business. The annual value of this house is
₹ 1,00,000 and he spent ₹ 5,000 as municipal taxes and ₹ 2,000 for repairs.

Other information:
A loan of ₹ 40,00,000 has been taken on 01-6-2020 for construction of House No. II. Construction of the house
was completed on 01-6-2021. He repaid the entire loan on 31-12-2022. Interest on loan is payable @ 12% p.a.
Compute his income from house property for the A.Y. 2023-24. [8Marks]

Question-2
Mr. Lucky owns a house property let out since 1/4/2018 to a school for monthly rent of ₹ 10,000. There was no
change in rent till 31/3/2022. On 1/4/2022, as per court decision rent was increased to ₹ 12,000 p.m. with
retrospective effect from 1/4/2020 and duly paid by school in the same year. Legal expenditure for such suit has
been incurred by Mr. Ali ₹ 30,000. Discuss tax treatment u/s 25A. [2 Marks]

Question-3
Mr. Ajnabi has a house property in Cochin. The house property has two equal dimension residential units. Unit
1 is self-occupied throughout the year and unit 2 is let out for 9 months for ₹ 10,000 p.m. and for remaining 3
months it was self-occupied. Compute his taxable income from the following details:
Municipal value ₹ 2,00,000, Fair Rent ₹ 1,60,000, Standard rent ₹ 3,00,000, Municipal tax 10% (60% paid by
assessee), Interest on loan ₹ 40,000, Expenditure on repairs ₹ 20,000. [6 Marks]

Question-4
Mr. Rana used his house property for self-occupation till 1/8/2022 and let out the same for remaining period for
rent of ₹ 6,000 p.m. Compute his income from house property from the following details: Municipal value ₹
1,00,000, Fair Rent ₹ 80,000, Standard Rent ₹ 96,000, Municipal tax 16%, Interest on loan ₹ 10,000.
[3 Marks]

Question-5
X owns a house property in Pune, details relating to which are Municipal value ₹ 2,00,000 p.a., Fair rent ₹
1,80,000 p.a., Standard rent ₹ 2,10,000 p.a. It is let out throughout the previous year (rent ₹ 10,000 p.m. up to
15/10/2022 and ₹ 12,000 p.m. thereafter). The property is transferred by X to Y on February 28, 2023. However,
Y failed to recover rent for March, 2023. Find gross annual value of the property in the hands of X and Y for the
A.Y. 2023-24. [6 Marks]